Overshot the Mark? A Simple Explanation of the Chicago School's Influence on Antitrust

Abstract

Using George Stigler's rules of intellectual engagement as a guide, and applying an evidence-based approach, this essay is a critical review of former Federal Trade Commission Chairman Robert Pitofsky's How the Chicago School Overshot the Mark: The Effect of Conservative Economic Analysis on U.S. Antitrust, a collection of essays devoted to challenging the Chicago School's approach to antitrust in favor of a commitment to Post-Chicago policies. Overshot the Mark is an important book and one that will be cited as intellectual support for a new and "reinvigorated" antitrust enforcement regime based on Post-Chicago economics. Its claims about the Chicago School's stranglehold on modern antitrust, despite the existence of a perceived superior economic model in the Post-Chicago literature, are provocative. The central task of this review is to evaluate the book's underlying premise that Post-Chicago economics literature provides better explanatory power than the "status quo" embodied in existing theory and evidence supporting Chicago School theory. I will conclude that the premise is mistaken. The simplest explanation of the Chicago School's continued influence of U.S. antitrust policy -- that its models provide superior explanatory power and policy relevance -- cannot be rejected and is consistent with the available evidence.

Keywords: Bain, Bork, competition, Demsetz, Director, Easterbrook, error/cost, exclusive dealing, game theory, plausibility test, Posner, RPM, resale price maintenance, Sherman Act, Stigler, Wall

JEL Classification: K21, L40, L44